Human resource management public and nonprofit JOAN PYNES

Figures, Tables, and Exhibits xi Exercises xiii Preface xv Acknowledgments xxiii The Author xxiv PART ONE: HUMAN RESOURCES MANAGEMENT IN CONTEXT 1 1 Introduction to Human Resources Mana

Public and Nonprofi t Organizations includes several model syllabi for courses of

differing lengths, as well as additional class references The Instructor’s Guide

is available free online If you would like to download and print out a copy

of the Guide, please visit:

www.wiley.com/college/pynes

Lewis, The Ethics Challenge in Public Service, 2e Linden, Working Across Boundaries

Oster, Generating and Sustaining Nonprofi t Earned Income Pawlak, Designing and Planning Programs for Nonprofi t and Government Organizations Poister, Measuring Performance in Public and Nonprofi t Organizations

Rea and Parker, Designing and Conducting Survey Research, 3e Rainey, Understanding and Managing Public Organizations, 3e Snow and Phillips, Making Critical Decisions

Tempel, Hank Rosso’s Achieving Excellence in Fundraising, 2e Wholey et al., Handbook of Practical Program Evaluation, 2e

HUMAN RESOURCES MANAGEMENT

FOR PUBLIC AND NONPROFIT

ORGANIZATIONS

A S TRATEGIC A PPROACH

THIRD EDITION Joan E Pynes

Y

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THIRD EDITION

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Figures, Tables, and Exhibits xi Exercises xiii

Preface xv Acknowledgments xxiii The Author xxiv

PART ONE: HUMAN RESOURCES MANAGEMENT IN CONTEXT 1

1 Introduction to Human Resources Management

in the Public and Nonprofi t Sectors 3

The Public Sector 5

The New Public Service 22 Today’s Context for Human Resources Management 23

2 Strategic Human Resources Management and Planning 31

The Changing Role of Human Resources Management 33 Human Resources Outsourcing 36

Strategic Human Resources Management 38 Human Resources Planning 39

Evaluating the Effectiveness of Strategic Human Resources Management 46 Problems and Implications of Strategic Human Resources Management 47

3 The Legal Environment of Human Resources Management 55

Federal Equal Employment Opportunity Laws 56 Proving Employment Discrimination 66

Affi rmative Action: Executive Orders and Other Federal Laws 68 Affi rmative Action 71

for Managing Diversity 107

5 Volunteers in the Public and Nonprofi t Sectors 115

Use of Volunteers 117

Barriers to Volunteer Recruitment 120

PART TWO: METHODS AND FUNCTIONS OF

HUMAN RESOURCES MANAGEMENT 145

6 Job Analysis 149

Legal Signifi cance of Job Analysis Data 151 Job Analysis Information and Methods 153 Designing a Job Analysis Program 158 Strategic Job Analysis 164

Developing an Evaluation Program 223

11 Training and Development 308

The Training Process 311

Managerial and Executive Development 327

12 Labor-Management Relations: Collective Bargaining

in the Public and Nonprofi t Sectors 339

The History of Private Sector Collective Bargaining 340 Collective Bargaining in Nonprofi t Organizations 343 Collective Bargaining in the Federal Government 344 Collective Bargaining in State and Local Governments 346 Concepts and Practices of Collective Bargaining 346 Public Sector Distinctions 358

Nonprofi t Sector Distinctions 362 Privatization of Public Services 366

13 Strategic Human Resource Management and Technology 373

Information Systems Technology 375

Types of Information Systems 378 Information Systems Design 380 Information Technology Resource Policies 381 Human Resource Information Systems 383 Electronic Human Resources Management 388 Strategic Human Resources Management 389

14 Conclusion: Challenges for Public and Nonprofi t Organizations 395

What to Expect 395 Challenges of Strategic Human Resources Management 398 Change in Skill Requirements 399

References 401 Name Index 431 Subject Index 437

FIGURES, TABLES, AND EXHIBITS

5.1 Grid for Matching Incumbent and Potential Board Members 136 6.1 Department of Labor Worker Functions 172

9.1 General Schedule Pay Scale: Annual Rates by Grade and Step 259 9.2 City-County Library District Salary and Wage Schedule 260 9.3 Comparable Municipal Market Study for Select Local Government Positions 263

8.1 Common Rating Errors 225 8.2 Trait Rating Scale 236 8.3 Behaviorally Anchored Rating Scale 238 8.4 Management by Objectives Rating Scale 239 8.5 Sample Critical Incidents Report 240 8.6 Questions to Consider When Developing a Performance Evaluation System 244 9.1 Typical Compensable Factors 256 11.1 Montgomery County, Maryland, Leadership Competencies 328 11.2 Leadership Competencies Expected of

Senior Executive Service Executives 330 12.1 National Labor Relations Board Jurisdictional Standards in Effect as of July 1990 342

1.1 Art Museums Are Looking for Leaders 29 2.1 Nature Conservancy’s Leader Abruptly Steps Down 52 2.2 Travis County, Texas, Facing a Brain Drain 53

3.1 A Muslim Woman’s Right to Wear a Head Scarf at Work 84 3.2 State and Local Laws on Human Resources Management 85 4.1 Susan-Steve Stanton 112

4.2 Tattoos and Piercing: Are They Acceptable in Public Safety Positions? 113

5.1 Voluntourism 141 5.2 Screening for Terrorists 142 6.1 General Manager and Chief Executive of the Walter E Washington Convention Center Resigns 177

6.2 Caseworkers Often Face Tremendous Diffi culties 178 7.1 Recruiting Medical Personnel in Southwest Florida 211 7.2 Boomerang Database Used to Recruit Retirees Back to the Labor Force 213

8.1 The HR Director Resigns Immediately 248 8.2 Why Executive Directors Get Fired 249 9.1 Compensation and Retirement Benefi ts from the United Way

of Metropolitan Atlanta 281

9.2 Are There Too Few Troopers for Safety? 282 10.1 Supporting Adoption in Carmel, Indiana 304 10.2 Depression Reported by 7 Percent of the Workforce 305 11.1 Improving Leadership Prospects for Women at Jewish Charities 336 11.2 Training First Responders in Water Rescue 337

12.1 No Union-Related E-Mail 370 12.2 Teachers at New York City Catholic Schools Strike 371 13.1 No-E-Mail Fridays 392

13.2 Tracking Workers Through Technology 393

Strategic human resources management (SHRM) is the integration

of human resources management (HRM) with the strategic mission

of the organization It adapts human resources policies and practices to meet the challenges that agencies face today, as well as those they will face

in the future What was written in the previous editions of this book is just as important today Human resources management departments must take a proactive role in guiding and supporting agency efforts to meet the changing demands of their external and internal environments

Government and nonprofi t organizations are facing many challenges:

the tight budgets brought about by declines in tax revenues, declines in consumer spending, increases in unemployment, and federal government obligations in Iraq have reduced the federal dollars fl owing to programs

in state and local government programs President Bush has proposed reducing Community Development Block Grants, Child Care Develop-ment Block Grants, Social Services Block Grants, the Low - Income Home Energy Assistance Program, and other programs Also proposed are cuts

to Medicare and Medicaid, as well as a reduction in funding for the poration for Public Broadcasting and the National Endowment for the Arts ( Jensen & Perry, 2008) Reductions in public dollars and private dona-tions have required public and nonprofi t organizations to lay off staff, even as demands for many services continue to increase These changes

PREFACE

have occurred simultaneously with increasing demands for effi cient and effective services

The new public service has become more diverse Changing graphics have resulted in an increase in the number of employees who are women, members of ethnic and racial minorities, persons with disabili-ties, and employees from different generations with different knowledge, skills, abilities, and other characteristics (KSAOCs) Graduates of schools

demo-of public policy and administration are likely to take jobs in the nonprdemo-ofi t sector and show a greater interest in seeking employment opportunities in the private sector Today ’ s graduates are moving across the three sectors, looking for challenging work and the opportunity to learn new skills Mas-ter of business administration graduates are also looking for challenging work This presents an opportunity and challenge for public and nonprofi t organizations to design an HRM system that will recruit individuals want-ing a challenge, keep them motivated, and enable them to make a differ-ence through their work

Changes in information technology and automation have led to the restructuring of many public and nonprofi t agencies Advances in technol-ogy have enabled employees to work from their homes, provided oppor-tunities for more flexible work hours, and increased the employment options for disabled individuals Computer networks, videoconferencing, and streaming video have changed communication patterns Informa-tion technology is increasingly being used not only to automate routine tasks, but also to restructure and integrate service delivery procedures and programs

Organizations must do more than just adapt to internal changes They must also seek better ways to meet the expectations of citizens, clients, funding sources, foundations, elected offi cials, boards of directors, interest groups, and the media

The public sector is becoming less involved in direct service ery Government at all levels is increasingly relying on nonprofi t and pri-vate sector organizations to provide services Government work is being implemented through a network of contracting, intergovernmental grants, vouchers, tax credits, regulations, and other indirect administra-tive approaches While the federal government in particular is reducing the number of individuals it directly employs, it continues to need a sizable “ shadow ” to accomplish its mission (Light, 1999) These employees are part of the shadow that is created when public goods and services are pro-vided through private, nonprofi t, or state and local entities According to Light, many of the nation ’ s most challenging public service jobs are now

deliv-found outside the federal government, not inside it Kettl (2002, p 120) notes the following:

Government has come to rely heavily on for - profi t and nonprofi t organizations for delivering goods and services ranging from antimissile systems to welfare reform These changes have scarcely obliterated the role of Congress, the president and the courts State and local govern-ments have become even livelier Rather, these changes have layered new challenges on top of the old ones, under which the system already mightily struggles New process - based problems have emerged as well:

How can hierarchical bureaucracies, created with the presumption that they directly deliver services, cope with services increasingly delivered through multiple (often nongovernmental) partners? Budgetary control processes that work well for traditional bureaucracies often prove less effective in gathering information from nongovernmental partners

or in shaping their incentives Personnel systems designed to insulate government from political interference have proven less adaptive to these new challenges, especially in creating a cohort of executives skilled

in managing indirect government

Declining revenues combined with demographic changes, changes

in employees ’ values, and the need to retain effective workers are some

of the forces that have compelled public and nonprofi t organizations

to become concerned with their very survival These changes require

a more fl exible and skilled workforce To survive, organizations need

employees with new skills Hard Truths/Tough Choices (National

Commis-sion on the State and Local Public Service, 1993) identifi ed fi ve skill areas that the public manager needs: competency in team building, compe-tency in communication, competency in involving employees, commit-ment to cultural awareness, and commitment to quality These skills have HRM implications for employee recruitment, selection, and training

Public and nonprofi t sector jobs are increasingly professional in nature, requiring higher levels of education At the same time, there is a decrease

in jobs that are physically demanding Employees in public and nonprofi t agencies often deal with a variety of people, many of whom have a stake

in the agency Taxpayers, clients, customers, elected offi cials, donors, contractors, board members, and special interest groups are just some

of the stakeholders concerned about agency performance Employers must ask themselves how to meet the public ’ s objectives and satisfy the organization ’ s stakeholders

More recently there has been an emphasis on human capital: a recognition that employees are an agency ’ s most important organiza-tional asset Workers defi ne its character, affect its capacity to perform, and represent the knowledge base of the organization Despite this acknowl-edgment, it has been noted that there is little strategic human capital management being executed in federal agencies Reports indicate that the following activities are lacking: (1) leadership, continuity, and succession planning; (2) strategic human capital planning and organizational align-ment; (3) acquiring and developing staffs whose size, skills, and use meet agency needs; and (4) creating results - oriented organizational cultures All have been identifi ed as challenges facing the federal government (General Accounting Offi ce 2001a, 2001b, 2002a) State and local governments and nonprofi t and for - profi t organizations are facing these same human capi-tal challenges (Adams, 2006; Kunreuther, 2005; Cornelius, Corvington, & Ruesga, 2008; Hall, 2006a; Halpern, 2006; Light, 1998, 2000a, 2000b; Partnerships for Public Service, 2005; Brockbank, Johnson, &

Ulrich, 2008)

To be strategic partners, HRM departments must possess high els of professional and business knowledge HRM must establish links to enhancing organizational performance and be able to demonstrate on a continuing basis how its activities contribute to the organization ’ s success and effectiveness

Public and nonprofit agencies must be flexible and attuned to the needs of society They must seek to improve the quality of their services by engaging in SHRM Recruitment and selection strategies must be innova-tive, career development opportunities must be provided, work assignments must be fl exible, and policies must reward superior performers and hold marginal employees accountable These policies must be developed and administered according to the principles of equity, effi ciency, and effective-ness Performance standards must be designed to promote the goals and values of organizations

Historically, HRM has been seen as Cinderella — on the periphery, not integrated into the core of agency functions Fitz - enz (1996, p 3) notes that historically personnel departments were either dumping grounds for “ organizational casualties ” — likable employees who were not profi cient

in other tasks — or staffed with employees from line functions, neither of whom had any formal education in personnel administration He also attri-butes the peripheral relationship of HRM departments to other functional departments to the fact that for years, it was believed that organizations could not measure or quantify what the HRM department accomplished

or contributed to the organization ’ s bottom line HRM departments did not speak in fi nancial terms, the common denominator of business lan-guage, and were not very good at communicating the relationship between successful HRM programs and organizational success As a result, most HRM departments were denied access to the organization ’ s strategic plan-ning processes and forced into reactive activities instead of being allowed

to collaborate with the other management teams to formulate policies and determine future objectives This approach has been a mistake Research

in the private sector has found that returns on wise HRM policies can surpass returns from other resources (Cascio, 2000; Cascio & Boudreau, 2008; Fitz - enz, 1996, 2002) In the public and nonprofi t sectors, where

60 to 80 percent of expenditures are for personnel, SHRM is even more important than in the private sector

Purpose and Audience

This book addresses SHRM issues in nonprofit and public agencies

Although many textbooks address public personnel or HRM, only a few are dedicated to the nonprofi t sector, thus omitting a signifi cant partner that provides services benefi cial to society Topics such as recruiting and managing volunteers and working with a board of directors have not been addressed There are other omissions as well, such as a discussion of nonprofi t labor relations For example, nonprofi t labor relations are gov-erned by the amended National Labor Relations Act (the Labor - Manage-ment Relations Act), while most federal employees fall under the Federal Service Labor - Management Relations Statute (Title VII of the Civil Ser-vice Reform Act of 1978), and state and local government employees are guided by their respective public employee relations statutes In the public sector, an applicant ’ s or employee ’ s religion is irrelevant, and discrimination because of religion is prohibited However, religiously affi liated nonprofi ts that provide services of a religious nature may, in special circumstances, dis-criminate against applicants or employees on the basis of their religion

Because service provider nonprofits are typically the recipients of govern ment contracts and grants, a new intergovernmental environ-ment has emerged as nongovernmental organizations have increasingly been used to implement public policy Kramer and Grossman (1987) and Salamon (1995, 1999) refer to this new interorganizational environ-ment as the “ new political economy, ” the “ contract state, ” or “ nonprofi t federalism, ” while Light (1999) refers to it as “ shadow government ”

The emphasis in this book is on nonprofi ts that are closely associated with providing a public benefi t or service or with solving a problem on behalf of the public interest It focuses on nonprofi ts that are responsible for delivering health care, social services, education, arts, advocacy, and research The objectives of these nonprofi ts often parallel those of many government agencies in terms of the individual and community services they provide

Public organizations and nonprofits are similar in that they define themselves according to their missions or the services they offer These services are often intangible and diffi cult to measure The clients receiving public or nonprofi t services and the professionals delivering them make very different judgments about the quality of those services Both sectors are responsible to multiple constituencies: nonprofi ts are responsible to supporters, sponsors, clients, and government sources that provide fund-ing and impose regulations; and public agencies to their respective legis-lative and judicial branches and to taxpayers, cognate agencies, political appointees, clients, the media, and other levels of government (Kanter &

Summers, 1987; Starling, 1986) Lipsky and Smith (1989 – 1990) comment that public and private service organizations share many characteristics:

the need to process clients through systems of eligibility and treatment, the need to maintain a competent staff to be effective, and the need to account for fi nancial expenditures These organizations are also expected to be fair (equitable), accommodate likely and unanticipated complexities (respon-sive), protect the interests of sponsors in minimizing costs (effi cient), be true to their mandated purposes (accountable), and be honest (fi scally honorable)

The conceptual foundation of this book is strategic human resources management SHRM is the integration of human resources management with the strategic mission of the organization It adapts human resources policies and practices to meet the challenges agencies face today, as well

as those they will face in the future Human resources departments must take a proactive role in guiding and supporting agency efforts to meet the changing demands of their environments The information provided in this book is to be used to improve the effectiveness of HRM activities

In many organizations, HRM policies and practices develop as needed, with little integration of the organization ’ s future needs Often policies are developed to solve an immediate problem, with no thought to their long - term implications Such policies and practices lock the agency into infl ex-ible modes of operation, leaving them unable to see that other strategies might be more appropriate

This book emphasizes the importance of HRM functions, revealing them as major contributors to the accomplishment of the agency ’ s mis-sion in the present and as the agency changes The purpose of the book

is to provide practitioners, policymakers (such as elected offi cials), and board members of local, state, federal, and nonprofi t organizations with

an understanding of the importance of SHRM in managing change It provides the guidance necessary to implement effective HRM strategies

The book was also written to be a textbook for use in public tration and nonprofi t management graduate programs that offer courses

adminis-in personnel admadminis-inistration, HRM, strategic plannadminis-ing, and nonprofi t agement While the literature on nonprofi t management has increased in recent years, little information exists that addresses nonprofi t HRM con-cerns This book should help fi ll that void As more public administration programs offer a specialization in nonprofi t management, it is important that resources be available to target the challenges that both the public and nonprofi t sectors face

Overview of the Contents

Part One introduces the context and environment of human resources management Chapter One discusses human resources management and explains what public and nonprofit organizations are, how soci-ety and workplaces have changed, and the HRM implications of those changes Chapter Two explains how SHRM and human resources plan-ning are imperative if agencies are going to remain competitive and be able to accomplish their missions; it also discusses how the role of human resource specialists has to change as well Chapter Three presents the legal environment of human resources management, and Chapter Four discusses the importance of managing diversity if organizations expect

to prosper The importance of managing volunteers and how SHRM practices can assist in making the volunteer experience productive for the agency and satisfying to the volunteers and board members is the topic of Chapter Five

Part Two presents the techniques and functional areas of HRM ples are provided in each chapter Chapter Six explains the importance of job analysis before executing HRM policies or developing job descriptions, performance appraisal instruments, training and development programs, and recruitment and selection criteria A variety of job analysis techniques are discussed In Chapter Seven , recruitment and selection techniques are

Exam-explained Drug testing, physical ability tests, psychological examinations, and other selection techniques used in the public and nonprofi t sectors are summarized At the end of the chapter, important psychometric concepts are explained There is also information on practical intelligence, emo-tional intelligence, adaptability, multiple intelligences, and organizational citizen performance behaviors Performance management and evaluating employees ’ performance is the focus of Chapter Eight Different perfor-mance appraisal techniques are explained and their strengths and weak-nesses identifi ed The importance of rater training and documentation is noted Ethical issues in performance appraisal are discussed, as are merit pay and 360 - degree evaluations Chapter Nine identifies the internal and external factors that infl uence compensation policies and practices

The techniques used to develop pay systems are discussed Examples of job evaluation systems are provided, and nontraditional pay systems are explained In Chapter Ten , employer - provided benefits and pensions are discussed

The focus of Chapter Eleven is training and development activities

Changes in technology and demographics and the development of new responsibilities and expectations have made training and career devel-opment more important than ever before Identifying training needs, developing training objectives and the curriculum, and evaluating train-ing are explored Different training formats are summarized The chapter concludes with examples of management training and career development programs Chapter Twelve discusses collective bargaining in the public and nonprofi t sectors The legal environment of labor - management relations for nonprofi t, federal, state, and local employees is explored Defi nitions and explanations are provided for concepts such as unit determination, union security, unfair labor practices, management rights, impasse resolu-tion, and grievance arbitration The reasons that unions exist in the public and nonprofi t sectors are examined Chapter Thirteen discusses strategic human resource management and information technology The last chap-ter provides an overall conclusion It summarizes the key lessons presented

in the book, which I hope will convince public and nonprofi t tors of the importance of strategic HRM

November 2008

A number of people have made valuable contributions to this book

I thank Allison Brunner, Rebecca Heider, and Kathleen Dolan Davies from Jossey - Bass, as well as the four anonymous reviewers for their helpful comments and suggestions, which I have made whenever possible

As in the fi rst edition, friends, colleagues, and students provided assistance

by contributing workplace examples, reviewing chapters, or both Specifi

-cally, I thank Anne Goldyche Dailey, Patricia Goldstein, and Patricia Murray

for their observations of working in and with public and nonprofi t agencies

Thanks are also extended to Mike Durham, general counsel for the

High-lands County Sheriff ’ s Offi ce, who provided me with updated information

for the content under constitutional rights in Chapter Three

Special acknowledgment goes to my husband, Mike McNaughton, for his

sense of humor, editorial assistance, and encouragement I express my

appre-ciation to my sister Robyn for her encouragement as well Like the fi rst and

second editions, this book is in honor of my mother, who always inspired me

Joan E Pynes is a professor of public administration at the University

of South Florida She received her B.A degree (1979) in public justice from the State University of New York at Oswego and her M.P.A degree (1983) and Ph.D degree (1988) in public administration from Florida Atlantic University She is the author of articles and chapters on public and nonprofi t human resources management

After reading this chapter, you should be able to:

Understand the responsibilities and roles of human resources management

Understand what constitutes public organizationsExplain why civil service systems or merit systems exist in the public sector

Understand what constitutes nonprofi t organizationsIdentify the challenges facing human resources management today

Human resources management (HRM) is the design of formal systems

in an organization to ensure the effective use of employees’ edge, skills, abilities, and other characteristics (KSAOCs) to accomplish organizational goals HRM concerns the recruitment, selection, train-ing and development, compensation and benefi ts, retention, evaluation, and promotion of employees, and labor-management relations within an organization In public and nonprofi t agencies, the greatest expenses and the greatest assets are employees Unlike many for-profi t organizations, which can use technology to automate the production of their products and reduce staff, public and nonprofi t organizations typically provide some

type of service Thus, they rely on the professionalism and competence of their employees.

Machines cannot be substituted for most public and nonprofi t ees As a result, public and nonprofi t agencies are labor intensive; employee costs are typically between 50 and 80 percent of their budgets (Cascio &

employ-Boudreau, 2008; Fitz-enz, 2000) Employees are also the greatest assets

of public and nonprofi t organizations Whether referring to top ship, department directors or managers, or fi rst-level employees, the qual-ity and competencies of the workforce differentiate successful agencies or departments from others Why is one police department more effective than another when dealing with similar problems and situated in local governments with similar incomes and demographics and with similar responsibilities? Why is one substance abuse treatment center more effec-tive than another if they are using similar clinical protocols and techniques and have clients with similar problems? The answer is likely to be related

leader-to the professionalism and competencies of their employees The study of HRM has existed for a long time, despite having different names Frederick Taylor’s scientifi c management addressed the principle of breaking job positions down into their simplest tasks Scientifi c management was con-cerned with production effi ciencies through making the best employee and job match It also addressed employee motivation by developing incentive pay systems

Additional psychological aspects of HRM were developed to select individuals for military positions Intelligence, aptitude, and psychologi-cal tests were developed to screen and place employees in various posi-tions The fi eld of industrial-organizational psychology has played and continues to play a critical role in the development of HRM activities

Human resources management has evolved to encompass systems for the effective recruitment, selection, evaluation, and training and development

of employees Compensation studies to pay employees fair salaries and provide them with benefi ts that are important to them are also important components of HRM systems Fair compensation serves to retain and motivate employees

Human resources management responsibilities change as society changes Today, public and nonprofi t organizations are facing serious eco-nomic challenges, changes in the legal environment, and social, cultural, generational, and educational changes A strategic human resources man-agement system identifi es these changes and challenges and develops effec-tive human resources strategies to address them

The Public Sector

The public sector is composed of a variety of government organizations

Government agencies are owned and controlled by the people ment is used to maintain a system of law, justice, and social organization

Govern-It protects individual rights and freedoms, provides security and stability, and provides direction for the nation Government provides public goods, regulates certain industries and activities, and corrects problems that the markets create or are unable to address (Rainey, 2003)

In the United States, we have a variety of federal, state, and local government agencies

Federal employees work directly for federal agencies and receive their compensation and benefi ts from the federal government Federal Bureau

of Investigation agents are federal employees, as are doctors working for the National Institutes of Health and the Centers for Disease Control

Other federal employees may work for the Federal Aviation Authority, the Securities and Exchange Commission, and the Food and Drug Admin-istration (To see the scope of federal departments and agencies, go to http://www.whitehouse.gov/government/independent-agencies.html.) In

2006, 2.7 million employees were employed directly by the federal ment (U.S Census Bureau, 2006)

govern-State employees work directly for state agencies and receive their compensation and benefi ts from state governments Each state has a dif-ferent number of state agencies The compensation and benefi ts given

to state employees vary across the states In 2006, 5.1 million employees were employed directly by state governments (U.S Bureau of the Census, 2006)

There are more than eighty-eight thousand units of local ment: counties, cities, villages and townships, and special districts such

govern-as school districts, fi re districts, park districts, hospital districts, museum and zoo districts, and parks and recreation districts Local government employees work directly for local units and receive their compensation and benefi ts from the local governments and taxing districts The number

of local units varies across the states, as do compensation and benefi ts given to local government employees Even within the same county, county employees may be paid different salaries from employees working for city governments located in the county Also, special district employees receive different salaries and benefi ts There is often little consistency across local government units In 2006, the number of local government employees

was 11.9 million Most public employees work for local units (U.S Bureau

of the Census Annual Survey of Government Employment, 2006 http://

www.census.gov/govs/www/apes.html.)Individuals working directly for federal, state, or local units are consid-ered to be government employees In a democracy, government is owned

by all of its citizens, and most of the revenues that support government agencies typically come from taxes Government’s objectives are political

in nature Public agencies are infl uenced by certain values found in the private sector such as effi ciency, effectiveness, timeliness, and reliability

But they are also infl uenced by values not necessarily found in the private sector and often in confl ict with one another, such as accountability to the public at large and elected offi cials, being responsive to rule of law and governmental authorities, being responsive to public demands, being open

to external scrutiny and criticism, adhering to strict ethical standards, and conducting pubic affairs with the goals of fairness, equal treatment, social equity, and impartiality (Rainey, 2003)

Civil Service and Merit Systems

Many public agencies are required to comply with civil service or merit systems to facilitate these values and objective employment practices in public agencies:

◆ ◆ ◆

Federal government The Pendleton Act, passed in 1883, set up an

independent, bipartisan civil service commission to make objective, merit-based selections for federal jobs Those individuals best qualifi ed would receive a job or promotion based on their KSAOCs The terms

civil service system and merit system are often used interchangeably This is

because merit provides the foundation for civil service systems The ity to perform tasks is dependent not on political affi liation but on indi-vidual skills and abilities (that is, merit considerations) The intent of the merit system was to remove the negative effects of patronage in appoint-ing individuals to federal positions Public employees were expected to perform their work in a politically neutral manner In 1978, the Civil Service Reform Act made changes to federal personnel policies The Civil Service Commission was eliminated, and the Offi ce of Personnel Management and the Merit Systems Protection Board took its place

abil-•

However, being politically neutral, along with experience, education, and expertise are still important criteria for selecting federal employees.

State governments The federal government encouraged state and

local governments to develop civil service or merit systems as a tion of receiving federal grants (Aronson, 1974) The federal government has a vested interest in seeing that state and local programs supported

condi-by its funds are administered in an effi cient and professional manner

The recipients of federal monies were to ensure the proper tion of grant programs Standards were initially issued in the 1930s and continued through the 1970s when the Intergovernmental Personnel Act

administra-of 1970 was passed, which gave grants to state and local governments to improve their personnel practices The authority for state merit systems is typically outlined in state statutes, which direct a specifi ed agency to issue the necessary rules and regulations that have the effect of law and the necessary administrative procedures to carry out its provisions Most civil service systems have independent civil service commissions that are pat-terned after the fi rst Civil Service Commission They are bipartisan in composition and usually have three to fi ve members who serve staggered terms They are typically appointed by the governor They are usually responsible for overseeing hiring and promotions, but they may also be involved in adjudicating grievance or discharge hearing and developing

or approving job classifi cation schedules

Local governments The administrative structure and the authority

granted to local governments are typically found in their charters This provision for chartering local governments is found in state constitutions and state statutes For example, the Illinois state statute permits seven vari-eties of local government structure: aldermanic-city, trustee-village, com-mission, manager, special charter, strong mayor, and administrator Each form has its own rules for the selection and type of offi cers, their powers and responsibilities, and their general operations Any municipality may adopt the civil service provisions of the Illinois Municipal Code How-ever, they are not required to do so Should they adopt civil service provi-sions, they must adhere to them All relevant offi cers and employees must

be appointed, promoted, and removed according to civil service rules

◆ ◆ ◆

In jurisdictions with civil service systems in place, applicants are typically appointed after they have passed a standardized selection procedure The selection procedure could consist of written examinations, a combination

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of prior experience and education, or oral interviews Where competition exists for positions, candidates are ranked by their scores, with the agency appointing one of the top-ranking candidates.

Different rules apply to different civil service systems Some systems allow managers to select one of the top three ranked candidates to be selected, others allow one of the top fi ve ranked candidates to be selected, and others allow a larger range of acceptable candidates Some public employees are exempt from civil service requirements The exemptions permit chief executives to select people who are in agreement with their priorities for policymaking and politically sensitive posts In most state and local governments, department directors are appointed by the chief execu-tive Many public sector HRM regulations and responsibilities are codifi ed

in statutes, which means that any changes need the respective legislative body to make the change Chief executives and managers often have lim-ited administrative and managerial discretion Increases in compensation and benefi ts are often dependent on legislative approval

The federal and state governments grant hiring preference to veterans

of the U.S armed services Additional points may be added to the scores of eligible veterans applying for public sector positions

Economic Challenges

Seventy-one percent of low-income families work More than half of these families are headed by married couples One in fi ve workers is employed in occupations where the median wage is less than $8.84 an hour According

to Working Hard, Falling Short: America’s Working Families and the Pursuit of

Eco-nomic Security (Waldron, Roberts, Reamer, Rab, & Ressler 2004),

compensa-tion for one-fourth of wage earners in the United States is so low they are barely able to fi nancially survive Not only do these families suffer from low incomes, but they usually lack medical insurance, often spend more than

a third of their income on a place to live, and do not receive paid parental leave from their employers to deal with family issues and emergencies

This report is consistent with U.S Census data indicating that the number of Americans living in poverty and without health insurance is signifi cant In 2007, 37.3 million people were in poverty The poverty rate for blacks is 24.3 percent, Hispanics 21.5 percent, non-Hispanic whites 8.2 percent, and Asians 10.3 percent For children under eighteen years old, the poverty rate is 18.0 percent, and the number in poverty is 13.3 mil-lion (DeNavas-Walt, Proctor, & Smith, 2008) When times are tough, the demand for public services grows Low-income residents are dependent on

a variety of services, such as housing assistance, assistance for medical care, food, unemployment benefi ts, transportation, and utility bills.

Middle-income Americans are increasingly concerned about jobs, health insurance, pensions, housing, and income security as well Wage and salary increases have not kept up with increases in the cost of hous-ing, gasoline, food, education, and insurance Residents concerned about their living expenses tend to keep a closer eye on government spending and want tax relief At the same time, state and local governments are facing budget defi cits and have to make budget cuts Problems with the hous-ing markets and foreclosures, leading to reduced property taxes, reduc-tions in sales taxes due to declines in consumer spending, and increasing unemployment rates have led to reductions in spending, so state and local revenues are falling (Prah, 2008)

As a result of diffi cult economic times, federal, state, and local ments are looking to reduce expenses Strategies to save money include not hiring employees with benefi ts Examples include hiring supplemental direct-hire employees who work irregular hours; they receive a paycheck from the agency for time worked, but do not receive health insurance, retirement pensions, vacation or sick leave, and other benefi ts In some

govern-organizations, they are referred to as other personnel services workers.

Governments are also using more contract workers These workers work for public agencies, but they are procured through a staffi ng agency or other third party These work arrangements, as well as seasonal, part-time,

on-call, and temporary agency work, are referred to as nonstandard work

arrangements (Thompson & Mastracci, 2005) Privatization and

contracting-out services are also being used increasingly by public sector agencies

Privatization and Contracting-Out Services

Privatization and contracting out occur when public sector agencies tract with private nonprofi t, private for-profi t, or other public agencies to provide specifi c services A typical privatization agreement specifi es that a private or nonprofi t entity is responsible for producing particular services

con-The public employer chooses the service level and pays the amount

speci-fi ed in the contract, but leaves decisions about production methods to the contracted fi rm From an administrative perspective, privatization is often viewed as a way to save tax dollars, reduce the public payrolls, minimize government spending, and boost productivity

Supporters claim that contracting out government programs will lead

to greater effi ciency and more effective operations They maintain that

competition and fewer restrictions allow the contractors to be more effi cient and responsive and that cost savings can be achieved through the economies of scale used by one vendor to provide services to many communities and organizations It is believed that nonprofi t and private

cost-fi rms, not hampered by bureaucratic rules and regulations, can be more innovative than public sector ones (Osbourne & Gaebler, 1993; Savas,

2000, 2002) However, research on the cost savings of privatization is inconclusive There are examples of sweetheart deals with contractors, cost overruns, ineffi ciencies, and less-qualifi ed staff providing important services Furthermore, transparency, accountability, and concern for the public interest are often lacking (Feeney & Kingsley, 2008; Greenblatt, 2004; Light, 2008; Lee, 2008; Moe, 1987; Sclar, 2001; Starr, 1987)

Technological Innovations

Economic challenges have brought about an increase in accountability and

demands for greater productivity Innovations in technology are changing the way public sector organizations are structured and how work is

organized and managed E-government has been

defi ned as “the use of information technology

to support government operations, engage zens, and provide government services” (Cook, LaVigne, Pagano, Dawes, & Pardo, 2002, p 3) Within that defi nition are four dimensions that refl ect the functions of government itself:

citi-E-services—the electronic delivery of government information,

pro-grams, and services often over the Internet

E-management—the use of information technology to improve the

management of government, from streamlining business processes

to improving the fl ow of information within government offi ces

E-democracy—the use of electronic communication vehicles, such

as e-mail and the Internet, to increase citizen participation in the public decision-making process

E-commerce—the exchange of money for goods and services

over the Internet, such as citizens paying taxes and utility bills, renewing vehicle registrations, and paying for recreation programs,

or government buying offi ce supplies and auctioning surplus equipment

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Economic challenges have

brought about an increase in

accountability and demands

for greater productivity

Organizations need to recruit and hire people with a new set of skills and orientation to fi t the new culture Key SHRM challenges facing orga-nizations will be the ability to attract and hire qualifi ed applicants and to provide training for incumbent employees so that the benefi ts of technol-ogy can be realized.

The Nonprofi t Sector

Nonprofi t sector is the collective name used to describe organizations that are

not government or private for-profi t organizations They have also been

called the voluntary sector, the third sector, and the philanthropic sector Nonprofi t

organizations are chartered by each state and are conferred special exempt status by the states and the Internal Revenue Service (IRS) The IRS exempts nonprofi ts from paying federal corporate income taxes, and state and local governments may grant nonprofi ts exemptions from prop-erty and sales taxes

tax-To be recognized as a nonprofit, an organization must possess the following general characteristics: (1) it is specifi cally designated as a non-profit when organized; (2) profits or assets may not be divided among corporate members, officers, or directors in the manner of corporate dividends; and (3) it may lawfully pursue only such purposes as are per-mitted for such organizations by statute (Oleck, 1988) Internal Revenue Code 501(c) lists the types of associations, corporations, and trusts that can qualify for federal tax exemption (Table 1.1)

The largest nonprofi t classifi cation is 501(c)(3) nonprofi ts, referred to as

public charities The IRS defi nes a public charity as an organization that

nor-mally receives a substantial portion of its total income directly or indirectly from the general public or government This is different from 501(c)(5) (labor and agricultural organizations) and 501(c)(6) (business leagues) clas-sifi cations, which derive most of their money from members and are orga-nized to primarily serve the interests of their members

Individuals and corporations who give money to 501(c)(3) tions can deduct the value of the gift from their taxable income Of the 1.4 million nonprofi t organizations registered with the IRS in 2004, nearly half a million collected more than twenty-fi ve thousand dollars in gross receipts and are therefore required to fi le a Form 990 annually Public charities with less than twenty-fi ve thousand dollars in gross receipts are not required to fi le a Form 990 Therefore, the number of 501(c)(3) orga-nizations is higher than what is reported to the IRS (Boris, 2006) Human

Application Form Number Annual Return Required to Be Filed

Corporations organized under act of Congress (including federal credit unions)

T exempt organization Holding title to property of an exempt organization

Business leagues, chambers of commer

Improvement of business conditions of one or more lines of business

990 or 990-EZ

Domestic fraternal societies and associations

Lodge devoting its net earnings to charitable, fraternal, and other specifi

990 or 990-EZ Yes, if for certain Sec 501(c)(3) purposes

Benevolent life insurance associations, mutual ditch or irrigation companies, mutual or cooperative telephone companies, etc.

Application Form Number Annual Return Required to Be Filed Contributions Allowable

To provide funds to meet the liability of employers withdrawing from a multiemployer pension fund

T with multiple parents

Holding title and paying income from property to 35 or fewer parents or benefi

Regular business activities Communal religious community

990 or 990-EZ

Pools certain insurance risks of 501(c)(3)

990 or 990-EZ

Cooperative marketing and pur

service organizations are the most common type of public charity its (35 percent), followed by education nonprofi ts (18 percent), health care nonprofi ts (13 percent), public and societal benefi t nonprofi ts (12 percent), and arts, culture, and humanities nonprofi ts (11 percent) (Table 1.2).

nonprof-The National Taxonomy of Exempt Entities, developed by the National Center for Charitable Statistics, provides this classifi cation system for public charity nonprofi t organizations:

A Arts, Culture, and Humanities

B Education

C Environmental Quality, Protection, and Beautifi cation

D Animal-Related

E Health

F Mental Health, Crisis Intervention

G Diseases, Disorders, Medical Disciplines

H Medical Research

I Crime, Legal-Related

J Employment, Job-Related

K Food, Agriculture, and Nutrition

L Housing and Shelter

M Public Safety, Disaster Preparedness, and Relief

N Recreation and Sports

O Youth Development

P Human Services

Q International, Foreign Affairs, and National Security

R Civil Rights, Social Action, and Advocacy

S Community Improvement and Capacity Building

T Philanthropy, Voluntarism, and Grantmaking Foundations

U Science and Technology

There are approximately 9.4 million 501(c)(3) nonprofi t employees and approximately 4.7 million full-time equivalent volunteers Combined, the workforce is more than 14 million workers (Salamon & Sokolowski, 2006)